FISCAL 2016 SECOND QUARTER KEY
FINANCIAL HIGHLIGHTS
- Revenues of $2.16 billion compared
to $2.26 billion in the prior year; Excluding the impact from
foreign currency fluctuations, revenues increased 2%
- Reported Total Segment EBITDA of
$280 million compared to $352 million in the prior year
- Adjusted EPS were $0.20 compared to
$0.30 in the prior year – Reported EPS from continuing operations
were $0.15 compared to $0.27 in the prior year
- Digital Real Estate Services
revenues grew 35%, highlighted by robust traffic at the newly
integrated realtor.com®
News Corporation (“News Corp” or the “Company”) (NASDAQ:NWS)
(NASDAQ:NWSA) (ASX:NWS) (ASX:NWSLV) today reported financial
results for the three months ended December 31, 2015.
Commenting on the results, Chief Executive Robert Thomson
said:
“News Corp is evolving rapidly into a more digital and
increasingly global company with a diverse revenue mix that we
believe will drive long-term growth in profits and shareholder
returns. The company is, by most measures, the world's largest
player in digital real estate, a position certainly enhanced by the
rapid growth in the U.S. of realtor.com®.
In our News and Information Services segment, print advertising
remained challenged, but we are seeing growth in digital
advertising and circulation revenues. We are particularly focused
on cost reductions and sharing services around News Corp to
streamline operations at the newspapers in Australia and the
U.K.
Unruly, the viral digital advertising company acquired late last
year, has been swiftly integrated into many of our companies,
bringing cutting-edge metrics and a savvy social sensibility. We
are developing advertising products for clients keen to benefit
from the rise of video and mobile, and taking advantage of our
world-class mastheads which are increasingly powerful platforms,
editorially and commercially.
Macro-economic conditions in most of our markets have not been
auspicious, and foreign exchange fluctuations have been
particularly volatile, but we believe in the enduring value of our
prestigious brands and the sound logic of our digital
strategy.”
SECOND QUARTER RESULTS FROM CONTINUING OPERATIONS
The Company reported fiscal 2016 second quarter total revenues
of $2.16 billion, a 4% decline as compared to prior year second
quarter revenues of $2.26 billion. The decline in total reported
revenues includes a negative impact from foreign currency
fluctuations of $141 million. Adjusted revenues (as defined in Note
1) declined 1% compared to the prior year, as strong growth in the
Digital Real Estate Services segment was offset by lower
advertising revenues at the News and Information Services segment
and lower consumer revenues at the Book Publishing segment. Fiscal
2016 second quarter reported revenues include $87 million of
revenues from the acquisition of Move, Inc. (“Move”) in November
2014.
The Company reported second quarter Total Segment EBITDA of $280
million, a 20% decline as compared to $352 million in the prior
year. Adjusted Total Segment EBITDA (as defined in Note 1) declined
17%, compared to the prior year, as continued strength at the
Digital Real Estate Services segment was more than offset by the
declines at the News and Information Services, Book Publishing, and
Cable Network Programming segments. Negative foreign currency
fluctuations reduced Total Segment EBITDA by $25 million as
compared to the prior year.
Income from continuing operations was $106 million for the
quarter as compared to $182 million in the prior year due to lower
Total Segment EBITDA and lower Other, net.
Earnings per share from continuing operations available to News
Corporation stockholders were $0.15 for the quarter as compared to
$0.27 in the prior year. Adjusted EPS (as defined in Note 3) were
$0.20 compared to $0.30 in the prior year.
SEGMENT REVIEW
For the three months ended
For the six months ended December 31, December 31,
2015 2014 % Change 2015
2014 % Change (in millions) Better/
(Worse)
(in millions) Better/
(Worse)
Revenues: News and Information Services $ 1,400 $
1,523 (8) % $ 2,690 $ 2,974 (10) % Book Publishing 446 469 (5) %
855 875 (2) % Digital Real Estate Services 208 154 35 % 399 266 50
% Cable Network Programming 106 112 (5) % 230 251 (8) % Other
1 - ** 1 - **
Total
Revenues $ 2,161 $ 2,258 (4) % $ 4,175 $ 4,366 (4) %
Segment EBITDA: News and Information Services(a) $ 158 $ 216
(27) % $ 241 $ 321 (25) % Book Publishing 57 77 (26) % 99 132 (25)
% Digital Real Estate Services(b) 73 57 28 % 130 114 14 % Cable
Network Programming 39 54 (28) % 67 86 (22) % Other(c) (47)
(52) 10 % (92) (107) 14 %
Total Segment
EBITDA $ 280 $ 352 (20) % $ 445 $ 546 (18) % ** - Not
meaningful
(a)
News and Information Services Segment EBITDA for the three
and six months ended December 31, 2015 includes transaction related
costs of $5 million related to the acquisition of Unruly Holdings
Limited (“Unruly”).
(b)
Digital Real Estate Services Segment EBITDA for the three and six
months ended December 31, 2014 includes transaction related costs
of $16 million and $18 million, respectively, related to the
acquisition of Move.
(c)
Other Segment EBITDA for the three and six
months ended December 31, 2015 includes fees and costs, net of
indemnification, related to the U.K. Newspaper Matters of $7
million and $12 million, respectively. Other Segment EBITDA for the
three and six months ended December 31, 2014 includes fees and
costs, net of indemnification, related to the U.K. Newspaper
Matters of $13 million and $27 million, respectively.
News and Information Services
Revenues for the second quarter of fiscal 2016 decreased $123
million, or 8%, compared to the prior year. Total segment
advertising revenues declined 12%, primarily due to weakness in
print advertising, negative foreign currency fluctuations and lower
revenues at News America Marketing, partially offset by growth in
digital advertising revenues, including at Dow Jones, where digital
revenues accounted for approximately one-third of advertising
revenues in the quarter. Circulation and subscription revenues
declined 5%, due to negative foreign currency fluctuations. Growth
in paid digital subscribers in the U.S. and Australia, higher
subscription pricing and selected cover price increases offset
print volume declines and the impact from the change in the digital
strategy at The Sun. At Dow Jones, the Company continued to see
modest growth of professional information business revenues.
Adjusted revenues declined 4% compared to the prior year. Total
segment advertising revenues declined 6% and circulation and
subscription revenues increased 1%, excluding the impact of $52
million and $29 million, respectively, from negative foreign
currency fluctuations.
Segment EBITDA decreased $58 million in the quarter, or 27%, as
compared to the prior year. Adjusted Segment EBITDA decreased 22%
compared to the prior year, driven by lower advertising revenues,
higher promotion and marketing costs in the U.K. and transaction
costs of $5 million related to the acquisition of Unruly.
Book Publishing
Revenues in the quarter decreased $23 million, or 5%, compared
to the prior year, due to lower e-book sales, negative foreign
currency fluctuations and lower revenues from the Divergent series,
partially offset by strong sales in General Books resulting from
the popularity of The Pioneer Woman Cooks: Dinnertime by Ree
Drummond. Digital sales represented 16% of consumer revenues for
the quarter. Segment EBITDA for the quarter decreased $20 million,
or 26%, from the prior year, primarily due to the factors noted
above. Adjusted revenues decreased 3% and Adjusted Segment EBITDA
decreased 25% compared to the prior year.
Digital Real Estate Services
Revenues in the quarter increased $54 million, or 35%, compared
to the prior year, primarily driven by the inclusion of the results
of Move, acquired in November 2014. At REA Group Limited (“REA
Group”), increased revenues from greater residential listing depth
product penetration were offset by negative foreign currency
fluctuations. Segment EBITDA in the quarter increased $16 million,
or 28%, compared to the prior year, primarily due to the increased
revenues noted above and the absence of one-time transaction costs
of $16 million related to the acquisition of Move in November 2014,
partially offset by negative foreign currency fluctuations.
In the second quarter, Move’s revenues increased 35% on a
stand-alone basis to $87 million from $65 million in the prior
year. Move saw continued strength in its Connection for
Co-Brokerage product and non-listing Media revenues, coupled with
market share gains for its Top Producer product. Based on Move’s
internal data, average monthly unique users of realtor.com®’s web
and mobile sites for the quarter grew 37% year-over-year to
approximately 39 million, which was driven by 57% growth in mobile
users; traffic accelerated in January to 50 million monthly unique
users, or 34% growth year-over-year.
Adjusted revenues increased 22% compared to the prior year.
Adjusted Segment EBITDA increased 19% compared to the prior year,
reflecting continued growth at REA Group offset by higher
investment spending at Move. Adjusted revenues and Adjusted Segment
EBITDA for both quarters include the results of Move from November
14 through the end of the applicable quarter.
Cable Network Programming
In the second quarter of fiscal 2016, revenues decreased $6
million, or 5%, compared to the prior year. Adjusted revenues
increased 10%, primarily due to higher affiliate and advertising
revenues. Segment EBITDA in the quarter decreased $15 million, or
28%, compared with the prior year. Adjusted Segment EBITDA declined
22%, primarily due to expected higher programming rights and
production costs related to the Rugby World Cup of $11 million.
Negative foreign currency fluctuations reduced reported revenues
and Segment EBITDA for the second quarter of fiscal 2016 by $17
million and $3 million, respectively, as compared to the prior
year.
Other
Segment EBITDA in the quarter improved by $5 million compared to
the prior year, primarily due to lower fees and costs, net of
indemnification, related to the claims and investigations arising
out of certain conduct at The News of the World (the “U.K.
Newspaper Matters”).
The net expense related to the U.K. Newspaper Matters was $7
million for the three months ended December 31, 2015 as compared to
$13 million for the three months ended December 31, 2014.
DISCONTINUED OPERATIONS
During the first quarter of fiscal 2016, management approved a
plan to dispose of the Company’s digital education business. As a
result of the plan and the discontinuation of further significant
business activities in the Digital Education segment, the assets
and liabilities of this segment were classified as held for sale
and the results of operations have been reported as discontinued
operations for all periods presented.
On September 30, 2015, the Company sold the Amplify Insight and
Amplify Learning businesses. In the second quarter of fiscal 2016,
Loss from discontinued operations, net of tax, was $24 million,
which included approximately $17 million in severance and lease
termination costs which were incurred in conjunction with the
sale.
REVIEW OF EQUITY EARNINGS OF AFFILIATES’ RESULTS
Quarterly equity earnings from affiliates were $15 million
compared to $16 million in the prior year.
For the three months ended
For the six months ended December 31, December 31, 2015
2014 2015 2014 (in millions) (in millions)
Foxtel(a) $ 13 $ 15 $ 22 $ 40 Other equity affiliates, net 2
1 1 1 Total equity earnings of affiliates $ 15
$ 16 $ 23 $ 41
(a)
The Company amortized $13 million and $25 million related to
excess cost over the Company’s proportionate share of its
investment’s underlying net assets allocated to finite-lived
intangible assets during the three and six months ended December
31, 2015, respectively, and $14 million and $30 million in the
corresponding periods of fiscal 2015, respectively. Such
amortization is reflected in Equity earnings of affiliates in the
Statements of Operations.
On a U.S. GAAP basis, Foxtel revenues, for the three months
ended December 31, 2015, decreased $82 million to $598 million from
$680 million in the prior year period. In local currency, Foxtel
revenues increased 5% due to higher subscribers. Total closing
subscribers were approximately 2.9 million as of December 31, 2015,
with year-over-year growth driven by cable and satellite
subscribers, which increased over 7% compared to the prior year
period, and higher Presto subscribers. In the quarter, cable and
satellite churn improved to 10.3% from 11.8% in the prior year.
Foxtel EBITDA decreased $43 million to $155 million from $198
million. In local currency, Foxtel EBITDA declined 7% due to
planned increases in programming costs to support subscriber
growth, costs associated with higher sales volumes, the public
launch of Triple Play and continued investment in Presto.
Foxtel operating income for the three months ended December 31,
2015 and 2014 was $99 million and $118 million, respectively, after
depreciation and amortization of $56 million and $80 million,
respectively. Operating income decreased as a result of the factors
noted above and negative foreign currency fluctuations, partially
offset by lower depreciation expense resulting from Foxtel’s
reassessment of the useful lives of cable and satellite
installations due to lower subscriber churn. Foxtel’s net income of
$52 million decreased from $59 million in the prior year period as
a result of lower operating income as noted above.
FREE CASH FLOW AVAILABLE TO NEWS CORPORATION
Free cash flow available to News Corporation is a non-GAAP
financial measure defined as net cash provided by continuing
operating activities, less capital expenditures, and REA Group free
cash flow, plus cash dividends received from REA Group.
Free cash flow available to News Corporation excludes cash flows
from discontinued operations.
The Company considers free cash flow available to News
Corporation to provide useful information to management and
investors about the amount of cash generated by the business after
capital expenditures, which can then be used for strategic
opportunities including, among others, investing in the Company’s
business, strategic acquisitions, strengthening the Company’s
balance sheet, dividend payouts and repurchasing stock. A
limitation of free cash flow available to News Corporation is that
it does not represent the total increase or decrease in the cash
balance for the period. Management compensates for the limitation
of free cash flow available to News Corporation by also relying on
the net change in cash and cash equivalents as presented in the
Company’s consolidated statements of cash flows prepared in
accordance with GAAP which incorporates all cash movements during
the period.
The following table presents a reconciliation of net cash
provided by continuing operating activities to free cash flow
available to News Corporation:
For the six months ended
December 31,
2015 2014 (in millions) Net cash provided by
continuing operating activities $ 346 $ 544 Less: Capital
expenditures (120) (150) 226 394 Less: REA Group free
cash flow (72) (60) Plus: Cash dividends received from REA Group
24 26 Free cash flow available to News Corporation $
178 $ 360
Free cash flow available to News Corporation in the six months
ended December 31, 2015 was $178 million compared to $360 million
in the prior year period. The decrease was primarily due to lower
Total Segment EBITDA, lower dividends received of $38 million,
which includes the absence of dividends received from cost method
investments of $20 million during the six months ended December 31,
2014, as well as higher restructuring payments of $37 million. The
decline was partially offset by lower capital expenditures, due to
the absence of costs related to the relocation of the Company’s
U.K. operations to a new site in London in fiscal 2015.
The difference in free cash flow available to News Corporation
above includes a negative impact of foreign currency fluctuations
of approximately $30 million, or 9%, for the six months ended
December 31, 2015.
COMPARISON OF ADJUSTED INFORMATION TO U.S. GAAP
INFORMATION
Adjusted revenues, Adjusted Total Segment EBITDA, Total Segment
EBITDA, Adjusted net income available to News Corporation
stockholders, Adjusted EPS and Free cash flow available to News
Corporation are non-GAAP financial measures contained in this
earnings release. This information is provided in order to allow
investors to make meaningful comparisons of the Company’s operating
performance between periods and to view the Company’s business from
the same perspective as Company management. These non-GAAP measures
may be different than similar measures used by other companies and
should be considered in addition to, not as a substitute for,
measures of financial performance calculated in accordance with
GAAP. Reconciliations for the differences between non-GAAP measures
used in this earnings release and comparable financial measures
calculated in accordance with U.S. GAAP are included in Notes 1, 2
and 3 and the reconciliation of Net cash provided by continuing
operating activities to Free cash flow available to News
Corporation is included above.
Conference call
News Corporation’s earnings conference call can be heard live at
4:30pm EST on February 4, 2016. To listen to the call, please visit
http://investors.newscorp.com.
Cautionary Statement Concerning Forward-Looking
Statements
This document contains certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are based on management’s views and
assumptions regarding future events and business performance as of
the time the statements are made. Actual results may differ
materially from these expectations due to changes in global
economic, business, competitive market and regulatory factors. More
detailed information about these and other factors that could
affect future results is contained in our filings with the
Securities and Exchange Commission. The “forward-looking
statements” included in this document are made only as of the date
of this document and we do not have any obligation to publicly
update any “forward-looking statements” to reflect subsequent
events or circumstances, except as required by law.
About News Corporation
News Corporation (NASDAQ: NWS, NWSA; ASX: NWS,
NWSLV) is a global, diversified media and information services
company focused on creating and distributing authoritative and
engaging content to consumers throughout the world. The
company comprises businesses across a range of media, including:
news and information services, book publishing, digital real estate
services, cable network programming in Australia, and pay-TV
distribution in Australia. Headquartered in New York, the
activities of News Corporation are conducted primarily in the
United States, Australia, and the United Kingdom. More information
is available at: www.newscorp.com.
NEWS CORPORATION CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited; in millions, except per share
amounts) For the three
months ended For the six months ended December 31,
December 31, 2015 2014 2015 2014
Revenues: Advertising $ 976 $ 1,038 $ 1,856 $ 1,958 Circulation and
Subscription 621 644 1,260 1,316 Consumer 429 448 821 838 Other
135 128 238 254
Total Revenues 2,161 2,258 4,175 4,366
Operating expenses (1,193 ) (1,251 ) (2,392 ) (2,533 ) Selling,
general and administrative (688 ) (655 ) (1,338 ) (1,287 )
Depreciation and amortization (123 ) (127 ) (244 ) (251 )
Impairment and restructuring charges (22 ) (17 ) (39 ) (21 ) Equity
earnings of affiliates 15 16 23 41 Interest, net 11 13 23 30 Other,
net (6 ) 10 (1 ) 58
Income from continuing operations before
income tax
(expense) benefit
155 247 207 403 Income tax (expense) benefit (49 )
(65 ) 42 (112 ) Income from continuing
operations 106 182 249 291 (Loss) income from discontinued
operations, net of tax (24 ) (19 ) 22 (40 )
Net income 82 163 271 251 Less: Net income attributable to
noncontrolling interests (19 ) (20 ) (33 ) (43 ) Net
income attributable to News Corporation stockholders $ 63 $ 143 $
238 $ 208
Less: Adjustments to Net income
attributable to News
Corporation stockholders – Redeemable
preferred
stock dividends
(1 ) (1 ) (1 ) (1 ) Net income
available to News Corporation stockholders $ 62 $ 142
$ 237 $ 207 Weighted average shares
outstanding: Basic 581 580 581 580 Diluted 583 583 583 581
Income from continuing operations
available to News
Corporation stockholders per share - basic
and diluted
$ 0.15 $ 0.27 $ 0.37 $ 0.43
(Loss) income from discontinued operations
available to
News Corporation stockholders per share -
basic and
diluted
$ (0.04 ) $ (0.03 ) $ 0.04 $ (0.07 )
Net income available to News
Corporation
stockholders per share - basic and
diluted
$ 0.11 $ 0.24 $ 0.41 $ 0.36
NEWS CORPORATION CONSOLIDATED BALANCE
SHEETS (in millions)
As of December
31, 2015
As of June 30,
2015
ASSETS (unaudited) (audited) Current assets: Cash and cash
equivalents $ 1,883 $ 1,951 Amounts due from 21st Century Fox 60 63
Receivables, net 1,349 1,283 Other current assets 503
717 Total current assets 3,795
4,014 Non-current assets: Investments 2,288 2,379
Property, plant and equipment, net 2,554 2,690 Intangible assets,
net 2,164 2,203 Goodwill 3,090 3,063 Other non-current assets
984 686 Total assets $ 14,875 $
15,035
LIABILITIES AND EQUITY Current
liabilities: Accounts payable $ 248 $ 238 Accrued expenses 1,108
1,125 Deferred revenue 337 346 Other current liabilities 403
401 Total current liabilities 2,096
2,110 Non-current liabilities:
Retirement benefit obligations 291 305 Deferred income taxes 145
166 Other non-current liabilities 344 318 Commitments and
contingencies Redeemable preferred stock 20 20
Equity: Class A common stock 4 4 Class B common stock 2 2
Additional paid-in capital 12,441 12,433 Retained earnings 268 88
Accumulated other comprehensive loss (923 ) (582 )
Total News Corporation stockholders' equity 11,792 11,945
Noncontrolling interests 187 171 Total
equity 11,979 12,116 Total liabilities
and equity $ 14,875 $ 15,035
NEWS
CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
For the six months ended December 31, 2015 2014
Operating activities: Net income $ 271 $ 251 Less:
Income (loss) from discontinued operations, net of tax 22
(40 ) Income from continuing operations 249 291
Adjustments to reconcile income from
continuing operations to cash provided by
operating activities:
Depreciation and amortization 244 251 Equity earnings of affiliates
(23 ) (41 ) Cash distribution received from affiliates 30 68 Other,
net 1 (58 ) Deferred income taxes and taxes payable (98 ) 66
Changes in operating assets and liabilities, net of acquisitions:
Receivables and other assets (97 ) (56 ) Inventories, net 72 65
Accounts payable and other liabilities (15 ) (30 ) Pension and
postretirement benefit plans (17 ) (12 ) Net cash provided
by operating activities from continuing operations 346
544
Investing activities: Capital
expenditures (120 ) (150 ) Acquisitions, net of cash acquired (101
) (1,183 ) Investments in equity affiliates and other (36 ) (246 )
Proceeds from dispositions 2 114 Other 5 -
Net cash used in investing activities from continuing
operations (250 ) (1,465 )
Financing
activities: Repayment of borrowings acquired in the Move
acquisition - (129 ) Repurchase of shares (18 ) - Dividends paid
(74 ) (17 ) Other, net (7 ) (10 ) Net cash used in
financing activities from continuing operations (99 )
(156 ) Net decrease in cash and cash equivalents from continuing
operations (3 ) (1,077 ) Net decrease in cash and cash equivalents
from discontinued operations (40 ) (85 ) Cash and cash equivalents,
beginning of period 1,951 3,145 Exchange movement on opening cash
balance (25 ) (65 )
Cash and cash equivalents, end
of period $ 1,883 $ 1,918
NOTE 1 – ADJUSTED REVENUES, ADJUSTED TOTAL SEGMENT EBITDA AND
ADJUSTED SEGMENT EBITDA
The Company uses revenues, Total Segment EBITDA and Segment
EBITDA excluding the impact of acquisitions, divestitures, costs
associated with the U.K. Newspaper Matters and foreign currency
fluctuations (“Adjusted Revenues, Adjusted Total Segment EBITDA and
Adjusted Segment EBITDA”) to evaluate the performance of the
Company’s operations exclusive of certain items that impact the
comparability of results from period to period. The calculation of
Adjusted Revenues, Adjusted Total Segment EBITDA and Adjusted
Segment EBITDA may not be comparable to similarly titled measures
reported by other companies, since companies and investors may
differ as to what type of events warrant adjustment. Adjusted
Revenues, Adjusted Total Segment EBITDA and Adjusted Segment EBITDA
are not measures of performance under generally accepted accounting
principles and should not be construed as substitutes for amounts
determined under GAAP as measures of performance.
However, management uses these measures in comparing the
Company’s historical performance and believes that they provide
meaningful and comparable information to investors to assist in
their analysis of our performance relative to prior periods and our
competitors.
The following table reconciles reported revenues and reported
Total Segment EBITDA to Adjusted Revenues and Adjusted Total
Segment EBITDA for the three and six months ended December 31, 2015
and 2014.
Revenues Total
Segment EBITDA For the three months ended December 31, For the
three months ended December 31, 2015 2014 Difference 2015
2014 Difference (in millions) (in millions)
As
reported $ 2,161 $ 2,258 $ (97 ) $ 280 $ 352 $ (72 )
Impact of acquisitions (69 ) - (69 ) 5 16 (11 ) Impact of
divestitures - (1 ) 1 - - - Impact of foreign currency
fluctuations 141 - 141 25 - 25 Net impact of U.K. Newspaper
Matters - - - 7 13 (6 )
As adjusted $
2,233 $ 2,257 $ (24 ) $ 317 $ 381 $ (64 )
Revenues Total Segment EBITDA For the six months ended
December 31, For the six months ended December 31, 2015 2014
Difference 2015 2014 Difference (in millions) (in millions)
As reported $ 4,175 $ 4,366 $ (191 ) $ 445 $ 546 $ (101 )
Impact of acquisitions (180 ) - (180 ) 7 23 (16 )
Impact of divestitures - (2 ) 2 - - - Impact of foreign
currency fluctuations 329 - 329 54 - 54 Net impact of U.K.
Newspaper Matters - - - 12 27 (15 )
As
adjusted $ 4,324 $ 4,364 $ (40 ) $ 518 $ 596 $
(78 )
Adjusted Revenues and Adjusted Segment EBITDA by segment for the
three and six months ended December 31, 2015 and 2014 are as
follows:
For the three months ended
December 31, 2015 2014 % Change (in millions)
Better/(Worse)
Adjusted Revenues: News and
Information Services $ 1,469 $ 1,523 (4) % Book Publishing 454 469
(3) % Digital Real Estate Services 187 153 22 % Cable Network
Programming 123 112 10 % Other - - **
Total
Adjusted Revenues $ 2,233 $ 2,257 (1) %
Adjusted
Segment EBITDA: News and Information Services $ 169 $ 216 (22)
% Book Publishing 58 77 (25) % Digital Real Estate Services 87 73
19 % Cable Network Programming 42 54 (22) % Other (39)
(39) - %
Total Adjusted Segment EBITDA $ 317 $ 381
(17) % ** - Not meaningful
For the six months ended December 31, 2015
2014 % Change (in millions)
Adjusted Revenues:
News and Information Services $ 2,874 $ 2,974 (3) % Book Publishing
853 875 (3) % Digital Real Estate Services 321 264 22 % Cable
Network Programming 276 251 10 % Other - - **
Total Adjusted Revenues $ 4,324 $ 4,364 (1) %
Adjusted Segment EBITDA: News and Information Services $ 258
$ 321 (20) % Book Publishing 98 137 (28) % Digital Real Estate
Services 164 132 24 % Cable Network Programming 77 86 (10) % Other
(79) (80) 1 %
Total Adjusted Segment EBITDA $
518 $ 596 (13) % ** - Not meaningful
The following tables reconcile reported revenues and Segment
EBITDA by segment to Adjusted Revenues and Adjusted Segment EBITDA
by segment for the three months ended December 31, 2015 and
2014.
For the three months ended
December 31, 2015
As
Reported
Impact of
Acquisitions
Impact of
Divestitures
Impact of
Foreign
Currency
Fluctuations
Net Impact
of U.K.
Newspaper
Matters
As
Adjusted
(in millions)
Revenues: News and Information Services
$ 1,400 $ (20) $ - $ 89 $ - $ 1,469 Book Publishing 446 (4) - 12 -
454 Digital Real Estate Services 208 (44) - 23 - 187 Cable Network
Programming 106 - - 17 - 123 Other 1 (1) -
- - -
Total Revenues $ 2,161 $ (69) $ -
$ 141 $ - $ 2,233
Segment EBITDA: News and
Information Services $ 158 $ 4 $ - $ 7 $ - $ 169 Book Publishing 57
- - 1 - 58 Digital Real Estate Services 73 - - 14 - 87 Cable
Network Programming 39 - - 3 - 42 Other (47) 1
- - 7 (39)
Total Segment EBITDA $ 280 $
5 $ - $ 25 $ 7 $ 317 For
the three months ended December 31, 2014
As
Reported
Impact of
Acquisitions
Impact of
Divestitures
Impact of
Foreign
Currency
Fluctuations
Net Impact
of U.K.
Newspaper
Matters
As
Adjusted
(in millions)
Revenues: News and Information Services
$ 1,523 $ - $ - $ - $ - $ 1,523 Book Publishing 469 - - - - 469
Digital Real Estate Services 154 - (1) - - 153 Cable Network
Programming 112 - - - - 112 Other - - -
- - -
Total Revenues $ 2,258 $ - $ (1) $ - $ -
$ 2,257
Segment EBITDA: News and Information Services
$ 216 $ - $ - $ - $ - $ 216 Book Publishing 77 - - - - 77 Digital
Real Estate Services 57 16 - - - 73 Cable Network Programming 54 -
- - - 54 Other (52) - - - 13
(39)
Total Segment EBITDA $ 352 $ 16 $ - $ - $ 13 $
381
The following tables reconcile reported revenues and Segment
EBITDA by segment to Adjusted Revenues and Adjusted Segment EBITDA
by segment for the six months ended December 31, 2015 and 2014.
For the six months ended
December 31, 2015
As
Reported
Impact of
Acquisitions
Impact of
Divestitures
Impact of
Foreign
Currency
Fluctuations
Net Impact
of U.K.
Newspaper
Matters
As
Adjusted
(in millions)
Revenues: News and Information Services
$ 2,690 $ (21) $ - $ 205 $ - $ 2,874 Book Publishing 855 (29) - 27
- 853 Digital Real Estate Services 399 (129) - 51 - 321 Cable
Network Programming 230 - - 46 - 276 Other 1 (1)
- - - -
Total Revenues $ 4,175 $
(180) $ - $ 329 $ - $ 4,324
Segment EBITDA: News and
Information Services $ 241 $ 5 $ - $ 12 $ - $ 258 Book Publishing
99 (3) - 2 - 98 Digital Real Estate Services 130 4 - 30 - 164 Cable
Network Programming 67 - - 10 - 77 Other (92) 1
- - 12 (79)
Total Segment EBITDA
$ 445 $ 7 $ - $ 54 $ 12 $ 518
For the six months ended December 31, 2014
As
Reported
Impact of
Acquisitions
Impact of
Divestitures
Impact of
Foreign
Currency
Fluctuations
Net Impact
of U.K.
Newspaper
Matters
As
Adjusted
(in millions)
Revenues: News and Information Services
$ 2,974 $ - $ - $ - $ - $ 2,974 Book Publishing 875 - - - - 875
Digital Real Estate Services 266 - (2) - - 264 Cable Network
Programming 251 - - - - 251 Other - - -
- - -
Total Revenues $ 4,366 $ - $ (2) $ - $ -
$ 4,364
Segment EBITDA: News and Information Services
$ 321 $ - $ - $ - $ - $ 321 Book Publishing 132 5 - - - 137 Digital
Real Estate Services 114 18 - - - 132 Cable Network Programming 86
- - - - 86 Other (107) - - - 27
(80)
Total Segment EBITDA $ 546 $ 23 $ - $ - $ 27 $
596
NOTE 2 – TOTAL SEGMENT EBITDA
Segment EBITDA is defined as revenues less operating expenses
and selling, general and administrative expenses. Segment EBITDA
does not include: Depreciation and amortization, impairment and
restructuring charges, equity earnings of affiliates, interest,
net, other, net, and income tax (expense) benefit. Management
believes that Segment EBITDA is an appropriate measure for
evaluating the operating performance of the Company’s business
segments because it is the primary measure used by the Company’s
chief operating decision maker to evaluate the performance of and
allocate resources within the Company’s businesses. Segment EBITDA
provides management, investors and equity analysts with a measure
to analyze operating performance of each of the Company’s business
segments and its enterprise value against historical data and
competitors’ data, although historical results may not be
indicative of future results (as operating performance is highly
contingent on many factors, including customer tastes and
preferences).
Total Segment EBITDA is a non-GAAP measure and should be
considered in addition to, not as a substitute for, net income,
cash flow and other measures of financial performance reported in
accordance with GAAP. In addition, this measure does not reflect
cash available to fund requirements and excludes items, such as
depreciation and amortization and impairment and restructuring
charges, which are significant components in assessing the
Company’s financial performance. The following table reconciles
Total Segment EBITDA to income from continuing operations.
For the three months ended
December 31, 2015 2014 Change
% Change (in millions) Better/(Worse)
Revenues
$ 2,161 $ 2,258 $ (97 ) (4) % Operating expenses (1,193 ) (1,251 )
58 5 % Selling, general and administrative (688 )
(655 ) (33 ) (5) %
Total Segment EBITDA 280 352 (72 )
(20) % Depreciation and amortization (123 ) (127 ) 4 3 % Impairment
and restructuring charges (22 ) (17 ) (5 ) (29) % Equity earnings
of affiliates 15 16 (1 ) (6) % Interest, net 11 13 (2 ) (15) %
Other, net (6 ) 10 (16 ) **
Income from continuing operations before
income
tax expense
155 247 (92 ) (37) % Income tax expense (49 ) (65 )
16 25 %
Income from continuing operations $
106 $ 182 $ (76 ) (42) % ** - Not meaningful
For the six months ended December 31, 2015 2014 Change %
Change (in millions) Better/(Worse)
Revenues $ 4,175
$ 4,366 $ (191 ) (4) % Operating expenses (2,392 ) (2,533 ) 141 6 %
Selling, general and administrative (1,338 ) (1,287 )
(51 ) (4) %
Total Segment EBITDA 445 546 (101 ) (18)
% Depreciation and amortization (244 ) (251 ) 7 3 % Impairment and
restructuring charges (39 ) (21 ) (18 ) (86) % Equity earnings of
affiliates 23 41 (18 ) (44) % Interest, net 23 30 (7 ) (23) %
Other, net (1 ) 58 (59 ) **
Income from continuing operations before
income
tax benefit (expense)
207 403 (196 ) (49) % Income tax benefit (expense) 42
(112 ) 154 **
Income from continuing
operations $ 249 $ 291 $ (42 ) (14) % ** -
Not meaningful
NOTE 3 – ADJUSTED NET INCOME FROM CONTINUING OPERATIONS
AVAILABLE TO NEWS CORPORATION STOCKHOLDERS AND ADJUSTED EPS
The Company uses net income from continuing operations available
to News Corporation stockholders and diluted earnings per share
from continuing operations (“EPS”) excluding expenses related to
U.K. Newspaper Matters, Impairment and restructuring charges, and
“Other, net”, net of tax (“adjusted net income from continuing
operations available to News Corporation stockholders and adjusted
EPS”) to evaluate the performance of the Company’s operations
exclusive of certain items that impact the comparability of results
from period to period. The calculation of adjusted net income from
continuing operations available to News Corporation stockholders
and adjusted EPS may not be comparable to similarly titled measures
reported by other companies, since companies and investors may
differ as to what type of events warrant adjustment. Adjusted net
income from continuing operations available to News Corporation
stockholders and adjusted EPS are not measures of performance under
generally accepted accounting principles and should not be
construed as substitutes for consolidated net income available to
News Corporation stockholders and net income per share as
determined under GAAP as a measure of performance.
However, management uses these measures in comparing the
Company’s historical performance and believes that they provide
meaningful and comparable information to investors to assist in
their analysis of our performance relative to prior periods and our
competitors.
The following tables reconcile reported net income from
continuing operations available to News Corporation stockholders
and reported diluted EPS to adjusted net income from continuing
operations available to News Corporation stockholders and adjusted
EPS for the three and six months ended December 31, 2015 and
2014.
For the three months ended
For the three months ended December 31, 2015 December
31, 2014 Net income Net income
available to EPS available to EPS stockholders stockholders
(in millions, except per share data)
Income from
continuing operations $ 106 $ $ 182 $ Net income
attributable to noncontrolling interests (19) (20) Less:
Redeemable preferred stock dividends (1) (1)
Income from continuing
operations
available to News Corporation
stockholders
$ 86 $ 0.15 $ 161 $ 0.27 U.K. Newspaper
Matters 7 0.01 13 0.02 Impairment and restructuring charges
22 0.04 17 0.04 Other, net 6 0.01 (10) (0.02) Tax
impact on items above (7) (0.01) (11) (0.02)
Impact of noncontrolling interest on
items
included in Other, net above
- - 3 0.01
As adjusted $ 114 $ 0.20 $ 173 $ 0.30
For the six months ended For the six months
ended December 31, 2015 December 31, 2014 Net income Net
income available to EPS available to EPS stockholders
stockholders (in millions, except per share data)
Income from continuing operations $ 249 $ $ 291 $
Less: Net income attributable to noncontrolling interests (33) (43)
Less: Redeemable preferred stock dividends (1)
(1)
Income from continuing operations
available
to News Corporation
stockholders
$ 215 $ 0.37 $ 247 $ 0.43 U.K. Newspaper Matters 12 0.02 27
0.04 Impairment and restructuring charges 39 0.07 21 0.04
Other, net (a) 1 - (58) (0.10) Tax impact on items
above (15) (0.03) (2) - Tax benefit(b) (106) (0.18) - -
Impact of noncontrolling interest on
items
included in Other, net above
- - 11 0.02
As adjusted $ 146 $ 0.25 $ 246 $ 0.43
(a)
Other, net for the six months ended December 31, 2014
primarily includes a gain on the sale of marketable securities and
dividends received from cost method investments.
(b)
The Company recognized a tax benefit of approximately $106 million
from the release of valuation allowances resulting from the planned
disposal of the digital education business in the six months ended
December 31, 2015.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160204006562/en/
News CorporationInvestor RelationsMichael Florin,
212-416-3363mflorin@newscorp.comorCorporate CommunicationsJim
Kennedy, 212-416-4064jkennedy@newscorp.com
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